Fitch: no direct rating impact from updated IFRS 17
Insurance company ratings will not be directly affected by proposed IFRS 17-related changes, according to Fitch.
IFRS 17 requires a company to measure insurance contracts using updated estimates and assumptions that reflect the timing of cashflows and any uncertainty relating to insurance contracts.
Fitch said that no ratings should be directly affected by the IFRS 17-related changes proposed in a recently published Exposure Draft: Insurance Rating Criteria.
A statement from Fitch said: “IFRS 17 is a significant accounting change for insurance contracts, but it does in itself not alter the underlying substance of insurance operations. Fitch is also updating the guiding principles as the industry transitions to the new standard.
“However, there could be idiosyncratic rating impacts if the new disclosures reveal a material weakness or risks not previously incorporated into Fitch’s analysis — despite the significant level of existing disclosures and the non-public information already received by Fitch as part of its rating process.”
The statement added: “Fitch believes the principles introduced by IFRS 17 bring enhanced transparency to insurers’ financial statements, as well as greater consistency and comparability within and beyond the insurance market.”
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